Over the past several years, the U.S. has sought to maintain its status as a global superpower amid China's rise as a competing power. The resulting tensions are not limited to military power struggles but extend to economic dominance in the future. This competition between the two powers can be seen as two battlegrounds: the "trade war," which uses protectionist policies to reduce competitors' advantages, and the "technology war," which fights for supremacy in critical technologies, especially digital technology.
Recently, the lines between these two battlegrounds have blurred significantly because technology is no longer just a commodity in the global market but has become infrastructure tied to economic and military security. The trade policies of major powers are increasingly driven by strategic security concerns. These powers negotiate not only about trade balances or import tariffs but also about rights and conditions for accessing key technologies. For example, the U.S. has implemented policies restricting China's access to advanced semiconductors, while China has repeatedly limited rare earth mineral exports to the U.S.
These two battlegrounds became more intertwined during the Trump 2.0 administration when the U.S. imposed full import tariffs on goods from almost every country. While tariffs on most countries' general goods were negotiated down to 10-20%, tariffs on traditional industrial goods remained high. For instance, steel and aluminum were taxed up to 50%, and automotive products faced tariffs up to 25%.
The impact on U.S. imports of these goods largely met the objective of protecting domestic industries. In the first 10 months of 2025, U.S. imports of steel and automotive products shrank by 16% and 13% respectively compared to the same period the previous year. Many exporters lowered prices, sought new markets, or increased production within the U.S. or countries with lower import tariffs. Thus, import tariffs have become a powerful tool for the U.S.
However, when looking at imports of new industrial goods with few producers and difficult substitutes—such as electronics—the U.S. saw a 20% increase in imports in the first 10 months of 2025 compared to the prior year. This aligns with export growth from key chip-producing countries like Taiwan, whose electronics exports to the U.S. surged by 177% in 2025.
This paradox exists because the U.S. has not raised tariffs broadly on electronics, even though its main trade policy goal is to reduce trade deficits and bring key industrial production back home. Although the U.S. leads in designing high-end semiconductors, it still cannot manufacture advanced chips entirely domestically and remains heavily dependent on Asian chip supply chains.
In the technology war, the U.S.'s primary goal is to maintain leadership in high-value, security-critical industries such as artificial intelligence (AI). Amid China's rapid advancement from being the world's factory focused on low-cost production, it has become a leader in future industries including electric vehicles, clean energy infrastructure, and telecommunications networks.
The accelerating development of AI technology serves as a main pillar for the U.S. to sustain its global economic leadership. If the U.S. raises tariffs on advanced processing chips, domestic tech companies would be immediately affected because these chips are not only raw materials for the IT industry but also fundamental to AI investment trends. Production costs would rise, investment projects would slow, and technology competitiveness could falter, impacting short-term U.S. economic growth and long-term competitiveness.
Thus, the U.S. holds only a few fronts ahead of China, with AI being crucial. Advanced processing chips act as a bottleneck for AI development: even if other AI components are plentiful and fast-produced, limited chip supply would halt AI progress. This dynamic makes the technology war a "shield" in the trade war.
The merged trade and technology wars are pushing the world toward a "Winner Takes All" production structure. Those who maintain positions in highly complex supply chains with limited substitutes—such as the chip industry—hold great bargaining power, with no one able to share or seize benefits. A clear example is Taiwan Semiconductor Manufacturing Company (TSMC), whose role transcends business to become a geopolitical asset in both U.S. and Chinese security strategies.
When bargaining power comes from irreplaceable producers, competition in global trade and technology battles is not about "who produces cheaper" but "who is indispensable." In the superpower struggle, countries or companies owning standards, technologies, tools, or knowledge that cannot be quickly replicated will set industry directions without needing to produce everything more cheaply, as Taiwan exemplifies.
Since the U.S. still relies on foreign chip imports, it pursues a two-pronged strategy: (1) using technology measures to limit China's AI and advanced chip development capabilities through export controls on advanced semiconductors; and (2) accelerating domestic chip production by enhancing existing manufacturers' capacities and attracting top foreign producers to build U.S. facilities via industrial promotion policies, gradually reducing dependence on foreign suppliers, especially in Asia.
However, relocating advanced technology manufacturing is not immediate because chip plants require huge investment, a strong ecosystem, and highly skilled personnel with long experience. This means during the transition, the world and the U.S. will continue relying on existing producers, and Asian chip manufacturers will benefit from increased demand driven by AI trends.
For Thailand, electronics exports to the U.S. grew 53% in 2025, contributing to a 13% growth in Thai exports despite various U.S. import tariffs. This reflects Thailand's gains from AI-driven investment waves, similar to other countries in the region.
However, in terms of value added within Thailand, the electronics industry mainly plays a downstream role in assembly and testing. While these are vital production stages, they do not command high bargaining power like design or upstream manufacturing. Thailand's raw material imports also grew sharply last year alongside exports, indicating that the industry's economic benefits may not match those of countries dominating upstream high-value-added production chains, such as Taiwan or South Korea.
The key question is not only whether Thailand benefits from the global production chain today but how long it can hold this position amid major powers' efforts to diversify risks and redesign supply chains. If competition to subsidize industries and repatriate production intensifies, reliance on Southeast Asia's electronics assembly hubs may decline, challenging these countries to maintain their production bases.
In a Winner Takes All production structure, survival depends not just on competing to produce cheaper but on moving closer to indispensable points in the supply chain. Countries that survive will not ask "what can we produce?" but rather "what must be produced in our country?" For Thailand, this means upgrading from a low-cost downstream role to one competing on specialized expertise, quality standards, reliability, and ecosystem strength that make relocating production costly and difficult.
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